S Annamalai of the Pioneer Asia Group-led faction, which includes FIIs, has been declared elected by the Madras High Court for the Tamilnad Mercantile Bank (TMB's) Board. The group defeated the faction led by mining industry veteran S Vaikundarajan.
Meanwhile, the election results also may lead the bank to go for an IPO, which was opposed by the group that lost the election.
Annamalai, people from Vaikundarajan's side and senior advocates have confirmed the Court order, while TMB's management was not available for comment immediately. The faction helmed by Annamalai of Pioneer Asia Group, that owns Standard Fireworks, has the support of the VVD Group, Ayyanar Coffee and Tea Company, and foreign institutional investors.
The first meeting of the newly elected Board was held at Thoothukudi today. The meeting started at 10.30 am at Bank's head quarters and went on till 2 pm, according to sources.
|New members of TMB Board|
|P C G Asok Kumar|
|V V D N Vikraman|
|S R Aravind Kumar|
|B S Keshava Murthy|
Annamalai said that the decision on who the Chairman will be was not taken. However, he confirmed that FIIs will be part of the Board, but did not share the names and number of Board seats they will get. During the last AGM, held some six years ago, FII-backed group had secured board control of the bank.
Polling for the 10 board members seat held at the Bank's AGM at Thoorthukudi on January 29. The AGM was chaired by the retired Judge of Madras High Court.
Both groups, with allies and associations, hold nearly 20 per cent stake each in the bank.
At the Bank's Annual General Meeting (for six years from 2009-10) on January 29 at Thootukudi, the emotional cross section of shareholders, mainly Vaikuntarajan team, have said that if the Bank goes for an IPO it will open doors for outside investors.
While the Bank's management said that the IPO would help the Bank to meet regulator's CAR requirement, the shareholders said that they are ready to fund the Bank.
Annamali also echoed the same view and he said the Board will consider the same in the coming days.
The Bank which was started in 1921 was called as Nadar Bank, before it was renamed as Tamilnad Mercantile Bank. It has been mired in ownership tussles. The Bank has got into various disputes, ever since FIs bought stake from businessman C Sivasankaran, who had acquired the stake from the Essar Group.
The transaction to FIs has also attracted a show-cause notice from the Enforcement Directorate to TMB and Standard Chartered Bank, among others, for contravention of the Foreign Exchange Management Act (Fema) 1999.
According to the Bank sources the FIs and NRIs have bought the shares for Rs 24,000 per share in May 2007, while currently the Bank's share is trading at around 93,000 a share, in a private market. FIs and NRIs are holding around 42 per cent in the Bank, including 19 per cent voting right. The Pioneer Group was founded by Sankaralinga Nadar, one of the founders of the match industry in Sivakasi, along with Ayya Nadar.
Annamalai and his brothers have unitedly grown the businesses of Pioneer Asia group which has interests in safety matches, textiles, wind farm, fire works, IT park, auto components.
The group entered the asset financing business when it floated NBFC Pioneer overseras Finance with IOB, according to people who are close to the Group. His group was the only major player in the small sector taking on the competiton from the erstwhile MNC Wimco.
Later, when Wimco exited the field, ITC entered the field by sourcing matches from unorganised units. Still, Pioneer Asia remained a strong player. The Group came into limelight when the family members sold their stake in TMB in 1994.
This had triggered the takeover of the bank by Essar group.
Justice V Ramasubramanian and Justice N Kirubakaran in their interim order said that if normalcy is to be restored in the functioning of the Tamilnad Mercantile Bank, a full-fledged Board should assume office. The bench also asked the lender to declare the results and allow the elected directors to assume charge, subject to the outcome of the litigation pending in all these proceedings. "Therefore, for the present without pronouncing a final verdict on the question of validity of the votes polled by certain shareholders and without also recording a finding whether these votes have been calculated or not, we pass an order declaring the aforesaid 10 persons as having been elected. They are permitted to take charge subject to the ultimate outcome of these proceedings," the bench said. The ten members include P C G Asok Kumar, S Annamalai, B Vijayadurai, V V D N Vikraman, S R Aravind Kumar, A Shidambaranthan, B S Keshava Murthy, Chitra Murali, P Yesuthasen and K Nagarajan.